Scrapping stamp duty would benefit housing market and wider economy – Family BS

Scrapping stamp duty would benefit housing market and wider economy – Family BS

 

The new report, Lessons From The Stamp Duty Holiday, drew on surveys of lenders brokers and customers, a review of evidence of the effects of the tax holiday and data on transaction volumes as well as the Treasury’s tax take.

Of the 40 brokers surveyed, 53 per cent believed stamp duty on housing transactions should be scrapped permanently. Their comments included “it needs restructuring,” and “it’s just theft by government”.

But 22 per cent of the lender’s intermediaries disagreed, believing such a move would disrupt the market. They said: “Anything that artificially inflates house prices is not good for the market.” Also: “It is fuelling unsustainable house price rises.”

The tax break was also seen as having negatively affected first-time buyers, and at the same time, benefiting buy-to-let portfolio holders.

Some 50 per cent of intermediaries said the holiday affected most purchasers’ decisions on whether to buy, while 27 per cent said it affected some buyers’ decisions. A smaller six per cent of brokers thought it affected all purchasers’ decisions on whether to buy, while two per cent said none were influenced.

Similarly, 38 per cent of intermediaries said the holiday affected the timing of the purchase for most buyers, while 34 per cent said it had an impact on timing for some. Some 15 per cent of brokers said it impacted just a few, and 13 per cent said all buyers were influenced on timing by the tax break.

 

Customer views

The report also surveyed 72 customers of the society on their reasons for moving during the period of the holiday. The opportunity of the tax break was cited by 13 per cent, though this was lower compared to other considerations. Family reasons were a factor for 29 per cent, moving to a different area featured for 29 per cent, change in property size was given by 25 per cent, and 15 per cent were first-time buyers.

Asked specifically about the tax break, 12 per cent of customers said it was “the decisive factor”. It was “very important” for 15 per cent and “somewhat important” for 31 per cent. It was “not at all important” for 42 per cent.

Among customers, 45 believed the stamp duty break should be made permanent. Of these, 62 per cent said “it put money in the economy”, and  53 per cent said “it encourages mobility.” Some 53 per cent said it “encourages rightsizing”, and 44 per cent said believed “it simplifies the process of moving.”

One customer said: “Stamp duty as a concept for a homeowner is frustrating because you are paying the government for the privilege to work hard to buy a home, and being in a position to upgrade it.”

The report concluded that the real benefit of the stamp duty holiday had been to stimulate the housing market after lockdown and to increase spending on goods and services related to transactions.

Mark Bogard, chief executive of the Family Building Society said: “The stamp duty holiday has been a very elegantly crafted experiment, resulting in a 50 per cent increase in transactions.

“Freeing up the housing market generates economic activity. People spend money on moving and improving their new homes.

“Making the holiday permanent means the vast majority of people would not pay this bad tax. Their money could be better used supporting the economy,” he said.

Lessons From The Stamp Duty Holiday was produced by the London School of Economics on behalf of Family Building Society.